Q&A - I want to protect my children’s inheritance, what can I do?

Q:  I am in my 70s and have two adult children. My son is happily married, but my daughter has recently separated from her husband and is just beginning divorce proceedings. I want to leave my estate equally to my son and daughter, but am worried about my daughter’s divorce. Will her husband receive half her share and is there anything I can do to avoid it?

A:  Provided your daughter completes her divorce during your lifetime there will be nothing to worry about. Her husband will have no claim over your daughter’s share of your estate whilst you are still alive and any divorce settlement will be based solely on their own finances.

However, if you were to pass away before your daughter’s divorce is completed and she inherits half your estate, then this will be taken into consideration as part of her assets in the divorce proceedings. The only way to avoid this would be to leave your entire estate to your son, entrusting him to provide for his sister. If you are not comfortable doing this, an alternative would be to consider leaving your estate in a Discretionary Trust.

By leaving your estate in a Discretionary Trust it is your trustees’ decision as to whom they will pay out your estate and at what time. You are able to leave a Letter of Wishes advising your trustees as to whom you would like them to pay out and when, therefore you could leave a letter requesting your trustees pay out half your estate to your son immediately, with the other half to be paid to your daughter once her divorce has concluded. As the trust is discretionary and it is the trustees’ decision to make, your daughter has no absolute entitlement to receive anything from your estate and so it shouldn’t be considered in her divorce proceedings.

(Article published 21/01/2017)  

Victoria Wilson

Victoria Wilson

Partner

A Partner and Part of our Probate, Wills, Trusts and Tax team in Oswestry